Agencies Dive Into Data To Tame Health Care Cost Growth
Two new state agencies are deep in the process of collecting and assembling data on health care costs deemed critical to the success of the state’s 2012 cost containment law, grappling with the level of information commissioners will need to determine appropriate cost growth.
The Health Policy Commission and the Center for Health Information Analysis (CHIA) – both created by the 2012 law – are gearing up to analyze cost trends in the Massachusetts market that will serve as a dry run and set the foundation for a fall 2014 review for compliance with the new 3.6 percent growth cap on total state medical spending in 2013.
CHIA Executive Director Aaron Boros told a Health Policy Commission subcommittee on Wednesday that his agency is on track to produce its fourth annual report on health care cost trends by August, analyzing available data on premiums, total medical expenses and relative prices.
The report, which will be further dissected for a more comprehensive breakdown throughout the fall, will look at market trends from 2010 through 2012 and serve as an important source for the Health Policy Commission as it develops its own cost trends analysis for December.
The CHIA report will aggregate data from the state’s largest eight to 10 private insurers and the primary care clinician and managed care organization plans offered through Medicaid. The report will also look at quality of care data and payment methods for 2012.
Boros said part of the challenge his agency faces is that the Centers for Medicare and Medicaid Services doesn’t offer detailed breakdowns of the Massachusetts Medicare market, instead providing only top-level state data that makes regional cost comparisons difficult.
Responsible for implementing the new health care cost containment law, healthy policy commissioners probed Boros and his staff about the sources of data being used and the types of information that might be helpful in the future.
Boros assured commissioners that CHIA will have estimates of total medical expenses in the state for 2013, including Medicare data, in time for hearings in the fall of 2014 that will be held to review compliance with the cost growth cap and consider potential discipline or corrective plans for providers and insurers that exceed the benchmark.
Commission Chairman Stuart Altman said at some point the HPC will have to consider the question of what constitutes a “fair” price difference for similar services between providers, and asked CHIA to compare Bay State cost data to other states.
While Boros said CHIA was looking at comparisons with other states, he said he felt uncomfortable making a judgment call on acceptable price variation, which has been attributed in part by Attorney General Martha Coakley to the market clout of large provider networks and teaching hospitals.
“As soon as I hear the word fair I get nervous about my role,” said Boros, who will co-chair a commission on price variation in the near future with HPC Executive Director David Seltz. “When it comes to evaluating what’s right, we are generally agnostic and defer to you on that.”
Altman agreed with Boros saying, “You should not define fairness but you can help us in linking up these differences in spending based on what is generating those spending differences, whether it can be explained or not explained and legitimate or not legitimate. We’re not going to be able to avoid that.”
Commissioner David Cutler noted that acceptable price variation will likely be addressed in some form in the HPC cost trend report in December. “Fairness is always hard, but we will say something about the cost trends in our report. We have an ambitious agenda and we’ll see how much we can do,” he said.
Staff from the Attorney General’s office also gave the subcommittee an overview of their latest report on health care cost drivers that showed an increased number of consumers turning to tiered and limited networks or high deductible health plans. The report also revealed movement in the market away from HMO plans to PPO plans.
“We see the increase in tiered and limited network membership as very important. Consumers are responding to the market and it promotes efficient providers,” Assistant Attorney General Courtney Aladro said.
Aladro, however, advised the HPC to continue to monitor how consumer activity impacts the business models of providers, how the shift to lower cost providers might impact service contract negotiations with health plans, and whether the increased consolidation of the health care market and clinical alliances limit consumer choices.
“Affiliations may result in more care being directed to high cost providers if they’re aligned with high cost providers,” Aladro said.
The HPC has already chosen to review the proposed merger of the large Partners Healthcare System and with the smaller South Shore Hospital for its effects on cost, and the full board will vote June 19 on whether to proceed with the impact analysis.
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